Job-work manufacturing liability depends on who actually makes the finished product; raw material suppliers are not manufacturers without proof of further processing.

In job-work arrangements, manufacture is attributable to the person who actually carries out the process that brings the new product into existence, and the raw material supplier is not treated as the manufacturer unless further processing by it is proved by evidence. Machining was done by independent job workers after rough castings were cleared on duty, and the record did not show that the workers were hired labour of the appellants or that the machined castings were returned for further processing such as heat treatment or packing. On that basis, the finding that the appellants were the manufacturers was unsupported, and the duty demand against them could not be sustained.

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Issues: Whether the appellants or the job workers were the manufacturers of the machined castings and hence liable to duty.

Analysis: The machining was carried out by independent job workers after the rough castings were cleared on payment of duty. The record did not establish that the job workers were hired labour of the appellants or that the machined castings were returned to the appellants for further processing such as heat treatment or packing. The finding of manufacture by the appellants was unsupported by evidence. The settled principle applied was that the person who brings into existence the new product is the manufacturer, and the raw material supplier does not become the manufacturer merely because the goods are later received or despatched by it, unless further processing by it is proved.

Conclusion: The job workers, not the appellants, were the manufacturers of the machined castings; the demand against the appellants could not be sustained.

Ratio Decidendi: In job-work arrangements, manufacture is attributable to the person who actually carries out the process resulting in the new product, and the raw material supplier is not liable as manufacturer unless further manufacturing activity by it is proved by evidence.

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